China's holdings of U.S. Treasuries hit near 2-year low -data

Published Wed, May 15 2019 4:00 PM EDT

May 15 (Reuters) - China's ownership of U.S. Treasuries fell to its lowest in nearly two years in March amid uncertainty about a trade deal between Beijing and Washington, data from the U.S. Treasury Department released on Wednesday showed.

China's stake in Treasuries declined for the first time in four months to $1.121 trillion in March, which was the lowest since May 2017 when it was $1.102 trillion. It was $1.131 trillion in February, the data showed.

Despite the drop in Treasuries holdings, the world's second-largest economy remained the largest U.S. creditor.

Since last week, there is renewed speculation whether China may sell its U.S. debt in retaliation for increased tariffs on $200 billion of its exports to the United States.

On the other hand, Japan raised its Treasuries holdings to $1.078 trillion, the highest since November 2017, from $1.072 trillion in February.

Meanwhile, foreigners resumed sales of Treasuries in March as U.S. 10-year yields fell to 15-month lows after the Federal Reserve signaled it would not raise interest rates in 2019, according to the latest Treasury data.

They sold $12.53 billion in U.S. government debt in March after buying $19.91 billion the month before.

Overseas accounts also sold stocks for 11 straight months, reducing their equity stakes by $23.64 billion in March.

On the other hand, they bought $4.74 billion in agency securities and $1.11 billion of corporate bonds. (Reporting by Richard Leong Editing by James Dalgleish)